"Maintaining strong defined-benefit pensions is not only the right thing to do for our citizens, it's the best thing for our nation's economy," he told the Council of Institutional Investors in Boston on Sept. 27.
New York's pension system, with more than 1 million members and assets of $147 billion, was the best-funded in 2010, at 101.5 percent, the Bloomberg data show.
Unfunded liabilities can harm credit ratings, said Ted Hampton, vice president and analyst at Moody's Investors Service. Since April 2009, Moody's has downgraded Illinois three times -- with one upgrade -- dropping it to A1 with a negative outlook from Aa3, and tying it with California as the company's lowest-rated states.
"In each case, the weakness of Illinois' public retirement plan was a primary consideration," Hampton said. The Bloomberg data show Illinois with a funding ratio of 45.4 percent, the lowest among the states.
Dave Urbanek, spokesman for the Illinois Teachers Retirement System, said that in 2010 the General Assembly acted to reduce the fund's deficit. New employees must work until 67 to retire with full benefits, and cost-of-living increases were limited.
In May, legislation requiring employees to contribute as much as three times more toward retirement stalled in the face of union opposition. Unfunded liabilities for the pension system were at $80 billion.
"We've never missed a pension check," Urbanek said in a telephone interview. "We're treading water. We're not where actuaries would like us to be, but we're far from going broke."
The 18-month economic contraction that ended in June 2009 reduced the value of the 100 largest public retirement funds by $835 billion, according to a U.S. Census 2010 report. Meanwhile, the $99.9 billion paid from those state and local pensions in the first half of 2011 was 47.7 percent more than benefits paid five years ago, in the first half of 2006, according to the census.
The largest state retirement funds earned half what they needed during the past decade to meet future payouts, Bloomberg News reported in July. In that survey of pensions with more than $20 billion in assets, all gained below 4 percent for the decade through June 30, 2010 -- less than the 8 percent that many assume.
New Jersey's pension systems saw unfunded obligations reach $53.8 billion as of that date, said Andy Pratt, spokesman for the Treasury in Trenton. The state hasn't paid enough in, he said, and in 2001, it boosted benefits by 9 percent.